Medicare needs to improve provider accountability for quality and cost of care, and increase the accuracy of its method for calculating practice expense payments. These were 2 of several recommendations from the Medicare Payment Advisory Commission (MedPAC) to Congress in a recent report.
Regarding practice expenses, MedPAC noted that at least some of the data sources that the Centers for Medicare & Medicaid Services (CMS) uses to calculate these are outdated or otherwise inaccurate. It suggests that Congress fund collection of updated practice cost data as this would improve the accuracy of Medicare payments.
For example, CMS calculates the per-service cost of medical equipment assuming that the equipment is operated 50% of the time. MedPAC’s survey of imaging providers in 6 markets found that MRI machines are used >90% of the time; computed tomography equipment is used >70% of the time. CMS’ incorrect assumption could result in overpaying for this service.
Measuring physician resource use is the next step toward increased physician accountability, according to the report. MedPAC examined the use of commercially available episode groupers to assess physician resource use. This method links all care that a beneficiary receives related to a particular episode of illness and adjusts for patient characteristics. The commission plans to address in a future report the question of whether a physician should be held accountable for episode resource use and quality.
MedPAC discussed 2 strategies for coordination of fee-for-service care of chronically ill beneficiaries. One would include a care manager who usually would be a nurse in a group practice; the other would involve an information system operated by a management organization. MedPAC suggested that CMS could pay a beneficiary’s primary physician or group for time spent with the care manager. In both models, the care managers would agree initially to guarantee some level of cost savings as a condition of payment.
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